Total investment in national manufacturing sector reached US$80.6 billion with domestic investment at US$36.9 billion (45.8%) and foreign investment at US$43.6 billion (54.2%).
Heaptalk, Jakarta — Throughout 2022, the Indonesian manufacturing sector reaped investments worth US$33.2 billion, or equal to Rp497.7 trillion (US$ 1=Rp14,966). Investment in the industrial sector in the country increased even in the midst of world geopolitical dynamics due to global economic uncertainty. The surge indicates that Indonesia is still an investment destination country for national and global manufacturing industry players.
According to the Minister of Industry Agus Gumiwang Kartasasmita, the manufacturing sector provided the largest investment contribution compared to other sectors. “In addition, this is an important signal that the level of trust in Indonesia remains high. Investors see that Indonesia is still good for business and investment,” said Agus.
In January-December 2022, total investment in the country reached Rp1,207.2 trillion equals to US$80.6 billion, referring to data from the Ministry of Investment/Investment Coordinating Agency. Based on business capital formation, domestic direct investment (PMDN) in that period reached Rp552.8 trillion, which is equivalent to US$36.9 billion, or 45.8% of the total investment throughout 2022. Foreign direct investment (PMA) in January-December 2022 amounted to Rp654.4 trillion or equal to US$43.6 billion (54.2%).
Of the total investment in that period, several sub-sectors that contributed the most were the base metal industry, metal goods, non-machinery and equipment which reached Rp171.2 trillion. The chemical and pharmaceutical industry sub-sectors were also in the top five investments by domestic and foreign investments, reaching Rp93.6 trillion. Meanwhile, the food and beverage industry contributed the most to domestic investment with a value of Rp54.9 trillion or 9.9% of domestic investment.
Domestic investment also has a broad impact on the national economy, one of which is through employment. Employment from additional investment during January-December 2022 was recorded to absorb 1.3 million workers.
Industrial downstreaming boosts investment
Ministry Agus revealed, “This brilliant achievement is inseparable from the implementation of the industrial downstream policy, one of which is the nickel downstream effort which is being boosted in supporting the acceleration of the development of the electric vehicle ecosystem with the development of the battery factory.”
Further, the Minister of Industry expected that increased investment, primarily in the manufacturing sector, can have an impact on absorbing local workers in each region and driving the small industrial sector in the areas included in the investment destinations.
To stimulate investment growth, the ministry implemented policies in the form of a 35% import substitution program, a program to increase the use of domestic products (P3DN), and natural resources downstream.
In addition, the effort in accelerating investment growth in the industrial sector is also carried out through equitable distribution of industrial development by expanding industrial estates throughout Indonesia.
The program’s performance can be seen from the large investment in several investment destinations outside Java in January-December 2022, including foreign investment in Central Sulawesi of USD7.5 billion, foreign investment in North Maluku of USD4.5 billion, domestic investment in Riau of Rp43.1 trillion, and foreign investment in East Kalimantan of Rp39.6 trillion.
“The government also continues to encourage investment in the development of halal industrial areas by offering several incentives, including incentives for the halal industry to export, import substitution, develop halal product process technology, innovate the halal industry, as well as conduct export coaching and assistance for small and medium halal industry players,” concluded Agus.
